German housing construction, building permits, show steep rise

There are numerous opponents in Germany of the threatened political measures to introduce a system of rent-capping to prevent ‘unscrupulous’ landlords from driving through rent increases. The solution, opponents insist, is to allow more house-building and to provide adequate incentive for builders to create new supply to meet the heavy demand.

There is plenty of evidence that this has been happening for some time, after a long hiatus when builders stood on the sidelines and housing supply in Germany stagnated. New figures in from the ZDB Zentralverband des Deutschen Baugewerbes, the construction industry federation, show that the number of new residential building permits rose between January and May of this year by 15.4% to 91,000 over the comparable period last year. This corresponds to 45,000 apartments in single or dual family dwellings (+7%) and 43,000 in multi-family homes (+26.9%).

Germany’s Federal Statistics Office also confirms the upward trend. Their figures show that in 2012 a total of 200,466 residential units were built across the nation, a rise of 17,356 units (+9.5%) on the year 2011. That year 2011 itself saw a rise of 14.6% on the previous year, with 2010 seeing only a miniscule rise of 0.5%. The year 2009 saw 158,987 residential units completed, the lowest level since the years of reunification.

ZDB president Felix Pakleppa commented that, although construction was now really starting to move, it was still well short of the 250,000 new-build units annually required to stave off an acute housing crisis.

The central lobbying organisation for the German real estate industry ZIA Zentraler Immobilien Ausschuss also weighed in on the construction figures. Andreas Mattner, ZIA’s president, commented: “Residential construction is attractive again, with rising demand, historically low interest rates, and a generally favourable economic outlook helping the upswing along. The much higher completion figures for residential housing give a clear indication that the market mechanism of supply and demand is working.” However, he warned that the construction of new and affordable buy-to-let accommodation was being seriously disadvantaged by constrictive regulation on energy-efficiency standards and through rising energy and building costs. Politics needed to avoid exacerbating the situation, he said.

“The ongoing debates about higher taxes and rent-capping are leading to a lot of uncertainty in the industry and could easily lead to a slowdown in new construction. We’re demanding more alliances of the sort we’ve seen in Hamburg (a recent political initiative) to cut through red tape and speed up planning processes, so that the construction recovery can continue”, said Mattner.